Tuesday, October 28, 2008

Iceland a hotbed of rate moves

After receiving help from the IMF, the usual policy prescription was put into place, raise rates. The central increased short rates 6% after it cut rates 3.5% on October 15. The rate cut was to help a floundering economy. The rate rise was from the IMF Asian crisis playbook. It will cut growth but try and stop the run-away inflation which has reached 15.9% in October.

For any country wanting IMF aid, there will be costly strings attached.

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